2002 OECD Economic Surveys: Euro Area 2002

image of OECD Economic Surveys: Euro Area 2002

This 2002 edition of OECD's periodic review of the Euro Area economy examines recent economic developments, policies and prospects and  includes special features on the fiscal policy framework, monetary management, financial market integration, and the EU's policy processes.

English Also available in: French

Policies to Boost Financial Market Integration

The monetary union has been seen as boosting financial market integration by reducing costs, eliminating exchange rate risks and raising price transparency. The full potential of gains from monetary union will only be realised, however, if remaining barriers to integration are dismantled and competitive conditions in EU financial markets are ensured. Since the early 1970s the European Commission has pushed for the creation of a European financial area, and important progress has been made, as discussed in some detail below. Rather than establishing uniform regulation and supervision for a single financial market, the principles of home country control, harmonisation of essential principles and mutual recognition were applied, assuming that mutual recognition and market forces would interact to yield convergence in the regulatory environment. Accompanied by the global trend of financial market liberalisation, this sparked competition between financial centres, which had developed within their distinct national financial systems, changing the structure of financial markets over time. Competition between financial centres has intensified significantly with the introduction of the euro in 1999. Nonetheless, liberalisation has not yet gone far enough and deep integration of financial markets is still far from being a reality in several market segments.

English Also available in: French

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